Immense strides in technology have facilitated broader opportunities for the automobile industry to reinvent safety. Cars and trucks equipped with AI-powered driver assistance systems (ADAS) are now being developed in order to heighten road safety and, hopefully, create fully automated, self-driving cars. Because of such significant strides, Fortune Business Insights reports that the autonomous car market is expected to be worth $1.45 billion by 2029.
But with the nature of cars changing, liabilities on the road are also facing a shift. Because of this, auto and truck insurance is also likely to see a change. Here’s what you need to know.
How automated vehicles change road safety
Automated vehicles are built with the vision of optimizing road safety. These innovative vehicles make use of progressive technologies in components like software algorithms, cameras, sensors, processors, and mapping to facilitate the application of ADAS. And as companies utilize machine learning (MI) to create self-driving cars, we reported that TuSimple has also created the world’s first fully-autonomous semi-truck. These trucks are able to run on open public roads without the need for a human operator or human intervention.
If deployed effectively, vehicles would be able to see advanced sensor technology, improved mechanical diagnostics, and traffic updates in real-time, all of which can heighten road safety. Instead of relying on human perception and judgment, cars and trucks will instead minimize potential errors with sensors and AI systems.
What this means for insurance companies
Although self-driving cars and trucks are not yet widely sold to the public, their potential integration into our daily lives in the future would pose a shift in the liability pool. This is because not all automated vehicles are completely self-driving. Others require a human operator.
This can pose a complication to insurance providers, since the responsibility would be split between the human driver and the robot operators. Forbes explains that product liability and personal auto belong under two different insurance categories, and insurers cannot easily switch to the product liability business. Moreover, many insurers rely on bundling auto and home policies for greater sales. With the loss of auto and truck insurance, the industry will have to reinvent its standard strategies.
What this means for consumers
Insurance premiums are almost always dependent on the risk factor of your asset. Sound Dollar explains that vehicles with advanced safety features, such as daytime running lights or newer technologies, can qualify for a discount on their premiums. And with automated cars having more sophisticated safety features and lower risk factors, insurance premiums are likely to be lower than your traditional vehicles for the individual consumer.
However, the question may be a little more complicated for automated trucks. This is because businesses — rather than individuals — are the most likely users of these vehicles. Since the question shifts from “Who’s at fault?” to “What’s at fault?”, the Insurance Information Institute (III) in the US explains that firms may be required to avail of several types of insurance coverage if they wish to use automated vehicles. These include technology errors and omissions, cyber liability, directors and officers, and auto liability coverage. These coverages serve to protect companies and their officers or board members. These policies or similar ones would most likely be adopted across the world.
Without self-driving cars or trucks being sold in the market just yet, there are no specific protocols for how insurance companies would implement policies for them. But as the market for autonomous vehicles grows, insurers and their clients must be prepared for the change they will usher into the industry.